Dark Times For Suntech
Suntech Power, one of the world’s largest suppliers of solar panels, is in danger of being taken over. Being obligated to pay over $541 million to bond holders, they have their backs against a corner. In addition to the debt owed to bond holders, Suntech Power had also stopped releasing financial statements last year because they had mistakenly invested over $690 million in fraudulent German bonds. Due to this, Chinese banks are reluctant to grant assistance and extend further loans. Suntech announced that it reached a deal with three fifths of its bondholders, asking for two months to sort things out, but most bondholders are questioning this claim. Unfortunately, Suntech’s bonds have been trading this week for as little as 30 cents on the dollar; its shares closed at $1.09 on Tuesday, down 5.2 percent for the day and down 63.2 percent compared to last year. The imminent fall of Suntech reflects the steady decline of China’s green industry over the past four years. Since China is prone to global warming because of its low-lying coastline and dense population, they have invested more in green technology than any other country. State owned banks have already provided more than $18 billion in loans to Chinese solar panel companies such as Suntech which increased production levels by tenfold over a four year period from 2008 to 2012, which resulted in a 75 percent price drop in solar panel prices and manufacturers losing around 33 percent profit for every panel sold. As a result, the overabundance of solar panels has caused countries such as the U.S. and E.U. to impose tariffs in order to avoid China dumping their products.
Written by: Kevin Zhang
Bradsher, Keith. “Suntech Power on Financial Brink.” The New York Times. The New York Times, 13 Mar. 2013. Web. 13 Mar. 2013. <http://www.nytimes.com/2013/03/14/business/energy-environment/suntech-power-on-financial-brink.html?pagewanted=2>.